First Financial could consider paying back TARP money - Memphis Business Journal:

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“The board will consider that nowthat we’ve done our common stocj offering,” Davis said in an interview afte the shareholders meeting at the Manor Housre in Mason. “We’re very well-capitalized. We feel very comfortabled with ourcapital position.” Norwood-based Firsr Financial received $80 million from the U.S. Treasury’ss Capital Purchase Program, part of the Troubleds Asset Relief Program, in December by selling preferred stockj tothe government. It pays a 5 percentf annual dividend for five the rate rises to 9 percenafter that. First Financial (NASDAQ: FFBC) raised $98 million in net proceedss June 8 from a commobnstock offering.
Part of the use of that capital coulrd be to pay back the Treasury money, Davis said. The boarsd would have to approve sucha move. The bank wouldc have to go through an application proces s to get government approval to pay back the Some banks have already received that Regulators asked First Financial to participate in thecapitall plan, Davis said in response to a shareholder question about why a healthy bank would take the The program was voluntary, but First Financial wanted to stockpilre capital. “We weren’t sure how deep the recession would be, and we thoughtg it was important to ensure we had ample hetold shareholders.
William Harding, a shareholder from Columbus, askec how the company plans to handlee buying back the stock from the The board willconsider it, Davis But, he added, the interest it receivee from investing part of that Treasuru money is enough to pay the dividends it A stipulation of the Treasurty money is that companies cannot raisse their common-stock dividends beyond the levek they were before the company decide d to take the money. Firs Financial wasn’t part of the recent federal government “stress tests.” Those gauged the nation’s 19 largest banks’ ability to withstand a worsening economy.
But Davias said First Financial performed its own tests internally using thegovernmentt criteria. Those tests showedd the bank is in good He pointed to numbers showing First Financiaol is wellbeyond regulators’ requirementss to be considered well-capitalized. Its tangible common equityg totaling 8.6 percent of tangible assetzs after the stock offering is far above the roughlyu 5 percent peergroul average, he said. The recentg public stock offering also made it unnecessarg for First Financial to go aheard with a shareholder vote that woulsd have allowed the board to issue more preferredd stock in order toraisre capital.
That proposal was first raised, Davis said, when otherf means of raising capital weren’t readilyg available. Harding said he woulfd oppose the company issuin any morepreferred stock, even though it’sx a moot point for now. “It’as a major concern for me that issuing new preferre stock dilutes the stock my fatheer purchasedin 1983,” Harding “I want to make sure my father’s investment is safe.” Several shareholders askeed whether and when the dividend would be raisesd back to its previous level. First Financiakl said in January it would cut the quarterly dividend from 17 centsw a share to10 cents.
“It was a tougu decision,” Davis said. “We were in a period of the worsf economic stress in80 years, and we felt it was the pruden thing to do. “We want to provide some good level of dividend but we also want to see the stockmprice improve. To do that, we need earningss improvement, so we need growth.” While Davis isn’ pleased with First Financial’s total return to shareholdera – a loss of 26 percent sincr January2008 – it stackd up well with other banks and with the he said. The S&P 500 fell 32 percent in that span whiler the stocks of a group ofFirsr Financial’s peers plunged 57 percent.
“This is the most difficulr banking environment andeconomy I’ve ever seen or experienced,” Davisx said. “But I think we’re weatheringb it quite well.” A shareholder proposap passed that that asks the board to conside r declassifying the board so that each membeer has to runfor re-election each year. In the board members served staggered three-yeafr terms. “If you have a board that stands for electioneveryu year, you have a board that is subject to replacement if it’s not acting in the best interests of said William Singer, a downtown attorney representing Denver-basex shareholder Gerald Armstrong, who put the proposal up for a vote.